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A cluster analysis of the toothpaste market, for example, might show that some people buy toothpaste because it tastes good (the sensory segment), while others are concerned with the effect of clean teeth on their social image (the sociables). Others are worried about decay (the worriers), and some are just interested in the best value for their money (the economic men). See Exhibit 3-14. Each of these market segments calls for a different marketing mix—although some of the four Ps may be similar.

Finally, a marketing manager has to decide which one (or more) of these segments will be the firm's target market(s).

You can see that these techniques only aid the manager. Judgment is still needed to develop an original list of possible dimensions—and then to name the resulting clusters.

Positioning segments by product features

Another approach to segmenting—positioning—shows where customers locate proposed and/or present brands in a market. It requires some formal marketing research but may be helpful when competitive offerings are quite similar. The results are usually plotted on graphs to help show where the products are "positioned" in relation to competitors. Usually, the products' positions are related to two product features that are important to the target customers.

Exhibit 3-14 Toothpaste Market Segment Description

Assuming the picture is reasonably accurate, managers then decide whether they want to leave their product (and marketing mix) alone or reposition it. This may mean physical changes in the product or simply image changes based on promotion. For example, most beer drinkers can't pick out their "favourite" brand in a blind test—so physical changes might not be necessary (and might not even work) to reposition a beer brand.

The graphs for positioning decisions are obtained by asking product users to make judgments about different brands—including their "ideal" brand—and then using computer programs to summarize the ratings and plot the results.

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Exhibit 3-15 shows the "product space" for different brands of bar soap using two dimensions—the extent to which consumers think the soaps moisturize and deodorize their skin. For example, consumers see Dial as quite low on moisturizing but high on deodorizing. Lifebuoy and Dial are close together— implying that consumers think of them as similar on these characteristics. Dove is viewed as different and is further away on the graph. Remember that positioning maps are based on customers' perceptions—the actual characteristics of the products (as determined by a chemical test) might be different!

Exhibit 3-15. "Product Space" Representing Consumers' Perceptions for Different Brands of Bar Soap.

The circles on Exhibit 3-15 show sets of consumers clustered near their "ideal" soap preferences. Groups of respondents with a similar ideal product are circled to show apparent customer concentrations. In this graph, the size of the circles suggests the size of the segments for the different ideals.

Ideal clusters 1 and 2 are the largest and are close to two popular brands— Dial and Safeguard. It appears that customers in cluster 1 want more moisturizing than they see in Dial and Lifebuoy. However, exactly what these brands should do about this isn't clear. Perhaps both of these brands should leave their physical products alone—but emphasize moisturizing more in their promotion to make a stronger appeal to those who want moisturizers.

Lava doesn't seem to satisfy any of the ideal clusters very well. Therefore, some attempt probably should be made to reposition Lava—either through physical or image changes.

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Note that ideal cluster 7 is not near any of the present brands. This may suggest an opportunity for introducing a new product—a strong moisturizer with some deodorizers. If some firm chooses to follow this approach, you would think of it as a segmenting effort.

Combining versus segmenting

Positioning analysis may lead a firm to combining—rather than segmenting— if managers think they can make several general appeals to different parts of a "combined" market. For example, by varying its promotion, Coast might try to appeal to clusters 8, 1, and 2 with one product. On the other hand, there may be clearly defined submarkets—and some parts of the market may be "owned" by one product or brand. In this case, segmenting efforts may be practical—moving the firm's own product into another segment of the general market area where competition is weaker.

Positioning as part of broader analysis

The major value of positioning is to help managers understand how customers see their market. It is a visual aid to understanding a product-market. But positioning usually focuses on specific product features—that is, it is product-oriented. There is the risk that important customer-related dimensions—including needs and attitudes—may be overlooked. But as part of a broader analysis of target markets, positioning can be very useful. The first time such an analysis is done, managers may be shocked to see how much customers' perceptions of a market differ from their own. For this reason alone, positioning is useful.

Premature emphasis on product features is dangerous, however. And it's easy to do if you start with a product-oriented definition of a market—as in the bar soap example. This leads to positioning bar soaps against bar soaps. But this can make a firm miss more basic shifts in markets. For example, bars might be losing popularity to liquid soaps. Or other products, like bath oils or bubble baths, may be part of the relevant competition. Such shifts would not be seen by only looking at alternative bar soap brands—the focus is just too narrow.

If customers are treating quite different products as substitutes, then a firm has to position itself against those products, too. It must avoid focusing on physical product characteristics that are not the determining dimensions of the target market.

WORD STUDY

1.technique – method of doing something that needs skill;

2.supervision – the act or fact of keeping watch over a job or activity, or the people doing it by the person in charge;

3.cluster – to gather in one or more groups;

4.judgement – 1) the ability to make decisions that are based on careful consideration of facts, principles, etc.; 2) an opinion;

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5.brand – 1) a class of goods which is the product of a particular company or producer; 2) a mark made to show the owner or producer of something;

6.competitor – a person, team, firm, product, etc., competing with another or others;

7.appeal –1) to make a strong request for help, support, mercy, etc.; 2) to please, attract, or interest;

8.aid – 1) support; 2) something that provides help and makes a process easier and more effective;

9.emphasis – special force or attention given to something to show it is particularly important;

10.pursue – 1) to follow in order to catch; 2) to continue steadily with.

I. Match the words on the left with their synonyms on the right.

II. Match the words on the left with their antonyms on the right.

III. Complete the following sentences using the words from the box. Use each word once in the necessary form.

. technique supervision cluster judgement brand

6.competitor appeal aid emphasize pursue

1.We lost the contract to our ..?.. .

2.A dictionary is an invaluable ..?.. in learning a new language.

3.What is your favourite ..?.. of chocolate?

4.There have appeared new ..?.. for producing special effects in films.

5.The new economic policy puts great ..?.. on reducing inflation.

6.Bad luck has ..?.. the company through the year.

7.The authorities want to remove that small ..?.. of old buildings from the modern city centre.

8.In my ..?.. we should accept the employer’s offer.

9.Does the idea of working abroad ..?.. to you?

10.The work was done under my ..?.. .

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COMPREHENSION QUESTIONS

1.What computer-aided methods can be used for segmenting consumer markets?

2.What is clustering?

3.What does positioning imply?

4.What is the major value of positioning?

CONCLUSION

Creative strategy planning is needed for survival in our increasingly competitive markets. Now you know how to find attractive target opportunities. You saw that carefully defining generic markets and product-markets can help find new opportunities. The shortcomings of a too narrow product-oriented view of markets were emphasized. You also learnt about market segmentation—the process of naming and then segmenting broad product-markets to find potentially attractive target markets. Some people try to segment markets by starting with the "mass market" and then dividing it into smaller submarkets based on a few dimensions. But this can lead to poor results. Instead, market segmentation should first focus on a broad productmarket, and then group similar customers into homogeneous submarkets. The more similar the potential customers are, the larger the submarkets can be. Four criteria for evaluating possible product-market segments were presented.

Once a broad product-market has been segmented, marketing managers can use one of three approaches to market-oriented strategy planning: (1) the single target market approach, (2) the multiple target market approach, and (3) the combined target market approach. In general, we encourage marketers to be segmenters rather than combiners. A practical—"rough-and-ready"—seven-step approach to market segmentation that works for both consumer and industrial markets was discussed. Some computer-aided segmenting approaches— clustering techniques and positioning were also discussed. In summary, good marketers should be experts on markets and likely segmenting dimensions. By creatively segmenting markets, they may spot opportunities—even breakthrough opportunities—and help their firms to succeed against aggressive competitors offering similar products. Segmenting is basic to target marketing. And the more you practice segmenting, the more meaningful market segments you will see.

QUESTIONS AND PROBLEMS

1.Distinguish between an attractive opportunity and a breakthrough opportunity. Give an example.

2.Explain how new opportunities may be seen by defining a firm's markets more precisely. Illustrate for a situation where you feel there is an opportunity— namely, an unsatisfied market segment—even if it is not very large.

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3.Distinguish between a generic market and a product-market. Illustrate your answer.

4.Explain the major differences among the four basic types of opportunities discussed in the text and cite examples for two of these types of opportunities.

5.Explain why a firm may want to pursue a market penetration opportunity before pursuing one involving product development or diversification.

6.Explain what market segmentation is.

7.List the types of potential segmenting dimensions and explain which you would try to apply first, second, and third in a particular situation. If the nature of the situation would affect your answer, explain how.

8.Explain why segmentation efforts based on at tempts to divide the mass market using a few demo graphic dimensions may be very disappointing.

9.Illustrate the concept that segmenting is an aggregating process by referring to the admissions policies of your own college and a nearby college or university.

10.Explain how positioning can help a marketing manager identify target market opportunities.

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